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Can you foreclose on a property without going through court?

On Behalf of | Jan 24, 2023 | Real Estate |

Maybe you purchased a fixer-upper that you never got around to fixing it. You decided to sell it via land contract because you knew that buyers would not be able to secure a mortgage for the property. Perhaps your neighbor wanted to buy a vacant plot between your homes that technically belonged to you. You negotiated an agreement where you would essentially finance the transaction, and they make monthly payments to you.

However, the person buying your property has fallen behind. As a private seller who provided their own financing for the transaction, you may feel like you have very few options. The thought of going to court for a judicial foreclosure is very intimidating, to say the least.

Property sellers and private financial companies that need to regain control over collateral property due to non-payment actually have alternative options beyond a standard judicial foreclosure under Washington state law. What are the alternatives to initiating a formal foreclosure?

Executing a deed in lieu of foreclosure

As a seller providing the financing for your sale, you can potentially have the buyer fill out a document with their other paperwork at the closing that will help you avoid the foreclosure process. A previously executed deed in lieu of foreclosure can allow you to become the owner of record on the property again without actually taking the buyer who failed to make payments to civil court.

Pursuing a non-judicial foreclosure

It is also possible to avoid formal court and request a non-judicial foreclosure in compliance with Washington state laws. Non-judicial foreclosure will take many months to complete. The process includes notifying the owner/borrower of their foreclosure risk, recording a notice of sale at the county recorder’s office and  then arranging for a trustee sale of the property.

Typically, you will have to wait at least 190 days after a default before the sale can occur. The buyer can potentially request mediation and could redeem the property before the trustee is able to sell the property. The non-judicial foreclosure process is a common tool employed by lenders across Washington.

Weighing your options when a buyer fails to make payments on a property can help you protect yourself during and after a real estate transaction.